tv Nightly Business Report PBS July 9, 2015 1:00am-1:31am PDT
. this is . this is "nightly business report." nyse interrupted for an unprecedented 3 1/2 hours etoday. no stocks traded on the big board because of a software malfunction. what happened? why and how vulnerable are investors like you in the age of electronic trading? not even a long trading haul could give stocks any relief today. the dow, nasdaq and s&p 500 all suffered stiff losses as china's shares plunge again and greece's debt debacle rolls on. >> a growing number of american workers are quietly uiidnapped oversea every year. the business of ransom we show what it is like to be taken hostage. all that and more tonight mon
"nightly business report" for wednesday, july 8th. good evening. i'm tyler mathisen. >> coming to you from the new york stock exchange. something happen today that has happened only a few times before. trading stopped for nearly four hours and it came at a time when events in greece and sharp declines in china already have investors on edge. while there was no activity here at the nyse, stocks were able to trade on other exchanges. the nyse made it clear wasn't a cyber breach but rather a technical problem that caused the suspension of trading. and the department of homeland security confirmed, there was no sign of malicious activity. bob has more on what it was like at the big board when trading came to a screeching halt. >> what started as a day concerned about greece and china turned into a waiting game, waiting for the nyse floor to open. they had connect. >> issues at the open meaning issues communicating orders between customers.
it was quickly resolved and didn't appear to affect overall trading. then at 11:32 eastern time, the nyse shut the entire floor down for what they called a technical issue. the electronic trading platform continued as usual as did trading in the stocks on other exchanges including nasdaq. trading resumed at 3:10 eastern time and the all important close came off uneventfully. so what happened? the nyse has declined to name a specific name but it is possibly a software issue from the night before. however the process of fixing that issue may have caused other software problems that eventually shut the entire nyse floor down. this has happened several times before on other exchanges as well. this is the most serious of those outages if it is a software problem. it wasn't a good day for the nyse. considering there are 11 exchanges and trillions of pieces of data that move between thernlg it is remarkable that doesn't happen even more often.
the last serious problem with this type occurred in 2009 when the nyse was shut down for roughly 30 minutes. for "nightly business report." >> so how concerned for that investors be when something like this happens? kenny works on the floor of the exchange. he is the director of o'neal security. >> nice to be here with you. >> how concerned should the retail investor be when we have a three and a half hour trading halt? >> the investor need not be concerned. there are now 11 exchanges so the market, there's not just the new york stock exchange the way there used to be years ago with modern technology and after 9/11, the whole structure of the market has changed. so it is very important in what investors should know. there were other venues to pick up the slack where we were unable to perform. the markets didn't melt down them didn't get nervous.
actually a retail investor, if he wasn't watching the news he would have no idea this was even happening because the transition was just so smooth. so in that sense, it was very, very good. when we and investors shouldn't be that concerned it was specific to the new york stock exchange. it didn't affect any other venues so therefore it continued to work. >> so if i wanted to buy 100 shares of ford or sell 100 shares of alcoa today, i could have done it at exactly the same price i would have got if this malfunction hadn't occurred, right? >> of course. there is a thing called nbbo. and brokers are forced as they should be to send or to float to the national best offer. in this case most of the time it is here at the new york stock today exchange. today because we couldn't function the other exchanges step up, volume trades, liquidity is there. there was no loss of liquidity in the market. so a retail investor wouldn't have any such idea that there was an issue. >> and it is important to note
when the new york stock exchange did reopen for trading, it was orderly and the close was orderly. >> and that was the key part. when they finally got through the problem, we just did a resume trade. so you pick up and start trading where they've been trading. where they had been trading in the other venues and we jump back into the fray again. and then the closing auction went off without a hitch and i think that was key. >> so if i look at the price of my e.t.f. or my mutual fund or the value of the dow jones industrial average tonight, i am not going to know this glitch happened. >> you wouldn't have any idea. trading went all day long and it went on uneventfully. and then the closing auction happened here. so everyone was priced off the primary markets closed. the primary market close with no issues. you wouldn't have any idea. that's a benefit to the retail investor in this country. >> all right. thank you so much for joining
us. >> well that software failure at the new york stock exchange was not the only one that happened today. not by a long shot. early this morning, a computer issue at united airlines grounded its planes worldwide for more than an hour. 4,900 flights affected. 400,000 passengers. that caused a prolonged ripple effect of heavy delays throughout the day at united hubs in chicago, denver houston newark among others. the airline blamed a router malfunction. and for a while that is what you saw on the home page. an outage. though other sections of the website did continue to work. >> while on wall street stocks fell hard. dropping at the open and staying lower until the closing bell. concerns about the pace of global growth after a sell-off in chinese stocks spilled over into the u.s. market. at the close the dow jones industrial average fell 261 points to close at 17,515. the nasdaq fell 87 points and the s&p 500 was off 34.
>> as sue just said, chinese stocks took another plunge today and it was dramatic. despite that country's regulators taking fresh steps to bolster the market. the shanghai composite fell another 6% overnight making that index's total decline over the past month about 30%. that translates into more than $550 billion worth of losses. and the recent plunge hasn't gone unnoticed by u.s. treasury secretary jack lu. >> the concerns that is a real one, what does it mean about long term growth in china. i think that that, i would break it into two pieces. how do china's policy makers respond to this and what does it mean by the core condition of the economy? i think the first is quite critical. >> in beijing a bubble bursting.
>> reporter: we saw plenty of votes in the stock market. we went down to a brokerage amidst all this and the mood was fearful, panicked, emotions were running high. the focus was mainly on this mass trading halt that we had here and what the chinese media had described as the biggest ever in the country's stock market history. now, more than 50% of the listed companies in china have had their shares suspended. ostensibly to stop the volatility and to protect the companies from falling prices but hit the opposite effect and it is really hurting sentiment. many are selling whatever they can. the anger was directed mainly at the government. a lot of investors, one in particular was complaining to us saying that the government got them to buy a lot of these shares and now they're all falling into an abyss. and that really gets at the
heart of why the government is behaving the way it is with such unusual moves and throwing everything including the kitchen sink at the problem. because the concern is that the stock market issue could become a social stability issue here. the government came in with other measures, saying that it was going to continue with its liquidity, also government authorities called on state owned enterprises not to sell their shares. more than 100 have now pledged not to sell their shares and to even buy shares. and other companies and executives have said they're taking up a patriotic fight in order to buy its shares and save the stock market. for "nightly business report," beijing. >> that drop in china's stock market comes at a time when there are increasing signs the economy is slowing. in fact the new report shows auto sales have dropped for the first time in two years. and that could be a big blow to u.s. automakers.
>> reporter: this is what automakers have been fearing for years. china where .25% of the world vehicles are sold appears to be slowing down. this tracks retail sales at dealerships says sales dropped 3.5% in june. the first monthly decline in two years. exactly why chinese consumers are pulling back is unclear. but it coincides with a plunge in the chinese stock market of 30% in the last month. for u.s. automakers like ford which has been aggressively responding in china, a drop in demand is a concern as it is for gm which is in the midst of pushing its cadillac brand in client. still, the ceo is confident her company can do well even if china's car buyers pull back. >> we see an opportunity. we're at a point of launching new vehicles which will come out
shortly. >> as the second largest auto maker in china, general motors could be hit hard if sales there continue to fall over an extended period of time. but it is not just general motors. almost every major automaker has a presence in china and all of them are counting on consumers to continue buying cars and suvs. "nightly business report" >> chicago. >> it is not just gm that has exposure to china. other company may have to reset their expectations as well if china's economy slows markedly. chad, welcome, good to have you with us. we like in the media to attribute many of the day's u.s. stock market losses to worries about what's going on over in china. but as a long term matter, is what is happening in china really going to be a material driver of u.s. stock values? >> well, it will be a material
driver in global growth which has a feedback loop into the markets here in the united states. keep in mind that china's gdp is roughly 15% of global gdp. so therefore, we do have to keep a careful consideration to global as well as economic friends within the chinese economy. >> how worried are you about what's happening with the chinese stock market ask the chinese economy, especially in light of the fact the central bank seems to be throwing in everything but kitchen sink. the chinese economy is decelerating. several years ago it was growing about 10%. our expectations are for about a 6% growth in 2015. and then, of course, a shift lower in growth to 4% over the course of the next three years. now that said, that is something that will affect the
u.s. financial markets. when we look at the equity markets within china, the equity markets, we're not very concerned about. the markets there are up 15% year to date, still with this massive sell-off on a 12-month basis. over 50%. and the majority of the investors in the chinese market are chinese citizens and they're the retail investor. it is very difficult for portfolio investors to invest directly into the chinese markets. >> chad, if those chinese retail investors are feeling their holdings wither with, go down by 50%, that would suggest they won't spend as much and that could depress imports into that country from other economies like ours. >> not only the united states but the largest trading partner
is the eurozone. one thing to consider, the sectors here in the united states that will be most vulnerable like you said, and mentioned in the last segment, autos as well as oil and gas complex will be affected because chinese growth deceleration will also move the demand curve down. henls the reason why autos, oil as well as commodities are ie feeling the brunt of the sell yacht. >> thanks for explaining the transmission there. >> and according to morning star these are the three mutual funds with the great exposure to china. fidelity emerging asia, principle markets a and templeton markets world a. for a longer list, you can go to our website. nbr.com. now to the other big concern for the market these days. greece as we reported last night that country has until sunday to strike a deal with creditors or else they suggest it won't be able to stay in the
euro zone. in athens, a report on what may happened next. >> reporter: after lightest night's disastrous meeting, there was another letter asking for a bailout. this one softer, less strident in tone and he promised by tomorrow he would submit a list of detailed reforms that would satisfy greece's creditors. still the endless delays, led to scathing criticism of the country's prime minister as he attendete a meeting of the european parliament in strasburg france. >> you are talking about reform but we never see the greece proposals of reform. >> i am angry because we are, already five years we are sleep walking with the help and with
the support, of the people of the extreme right. and not only we are sleep walking, the last months we are i have running. i have more the impression. but it is not you and it is not we who ourselves pay the bills. it is the ordinary greek citizens who are paying the bills. >> you cannot have your cake and eat it. they will give you no more, these people. they can't afford to. if they give you more they have to give other euro zone members more. if you have the courage, you should lead the greek people out of he euro zone with your head held eye. get back your democracy. get back control of your country. give your people the leadership and the home that they crave. >> here in greece the population and particularly the business community is growing increasingly concerned that an
exit from the euro is the most likely outcome. for "nightly business report," athens. federal reserve policy makers also expressed concern about greece and china. and the possible effects on the u.s. economy at last month's meeting hampton pearson has more on what was discuss asked what hints if any were given about a potential rate hike. >> when federal reserve policy monetary makers met this june they were looking for more signs of a stronger u.s. economy and concerned about the continuing greek debt crisis, as well as signs of an economic slowdown in china. international and domestic concerns are on the feds' radar screen and appear to be the keys to the timing of when janet yellen and her fellow monetary policy make letters begin raising key short term interest >> rates. >> i think it is encouraging to see they were on the ball. that they could recognize that there were risks outside the
u.s. that could still present a material threat to the u.s. outlook. >> reporter: the economy is getting closer to asieving the dual mandate of full employment and inflation. as of mid june it has not yet been achieved. many expect it could be absorbed by the end of the year and the fed wants more evidence inflation isa moving back toward target levels. and policy makers are still worried about the lingering effects of bad weather earlier this year and the slowdown at west coast ports at economic growth for the rest of the year. >> the committee clearly remained a bit under easy about the weakness that we see in the early part of this year. particularly the consumer piece of it which was more puzzling than the idea that the energy sector was reducing its cap x or exporters were having a harder time because of a strong dollar.
>> next week fed chair janet yellen reports to congress. to be followed at the end of the month by the next fomc meeting. for "nightly business report," hampton pearson in washington. still ahead, did the first big company report earnings this season knock it out of the park or strike out? alcoa's results next. mixed mixed results after the bell marked the unofficial start of the earnings season. earnings came in at 19 cents a share. that was 3 cents below analysts' estimates. while the revenue topped estimates and was higher than last year. the company's chief says business is strong despite commodity volatility.
>> the markets have faced a lot but here we see, the business performed the best first half since 2007. and there was real resilience. >> shares were slightly higher at alcoa in initial after hours trading. time microsoft will cut thousands of jobs and that's where we begin only the's focus. the tech jinl announcing it will slash nearly 8,000 positions with most of them coming from the phone business. the firm will take charge. shares were off slightly to $44.24. sales of the apple watch have plunged 90% since opening week. separately, a "wall street journal" report out today says the company is preparing for a record production of its next iphone by the end of the year. shares fell 2.5%.
the chairman will take over as ceo. the shares were off at barclay's, 1% to $15.79. and southwest airlines reporting an increase in traffic capacity and load factor from last year. the airline also saying that a key passenger revenue metric is expected to increase in its second quarter. shares of southwest all 3% on the down day. they finished at 32.36. >> the town of sun valley idaho is beautiful and it is known for two things. skiing and the coming gether of media moguls and tech titans who are looking to possibly strike a deal at the allen and company conference. julia is there with all the buzz.
>> reporter: from disney ceo to tessa ceo elon musk. they gather moguls and tech titans to spark conversation and deals. >> there's always consolidation. consolidation is the name of thing. >> we're always looking for acquisitions. >> attendees here in sun valley are buzzing about elon musk who took the stage on wednesday morning along with the chairman and founder. musk talking about the potential to grow tesla with the new suv which is in the works, as well as space-x. >> we want to look at of course, take a thorough view of the data and see if there are any near misses cox there have been something else? and what we need to do to fix that? our goal is to have the most reliable rocket ever.
this is going to be launching astronauts in a couple of years. so it needs to be super reliable. >> while attendees here talk about musk's comments about space and head out on their white water rafting trip, th're watching out for the next wave of deals. last year verizon's 4.4 deal of aol. the prior year of the "washington post" that took root. we'll be watching these heavy hitters for the next big deal. for "nightly business report," sun valley, idaho. coming up, what to do if you final yourself in a situation no one ever wants to be in. the second part of our series, the big business of ransom is next.
company that operate in the multimillion-dollar ransom business are busier than ever. an increasing number of american workers are being kidnapped overseas. tonight dean a gets assimilated look at what it is like to be taken hostage in the second part of our series on the big business of ransom. >> get down, get down! >> it may look like a scene out of a movie but the threat of kidnapping ransom and extortion is real. there are company who may get their business if it happens, you get out alive. i went through one of the kidnapping training sessions. >> a little taste of what it might be like and hopefully you can take that forward. >> it needs to be quick, violent without causing too much damage to you as individuals. >> with terrorist organizations like isis boko haram. >> people want to be protected.
we initiate the shock of capture. a violent action lots of noise, lots of chaos. >> from check points like this. >> step out. >> got a lady here from cnbc. >> to a kidnapping situation. being taken hostage, interrogated. >> who do you work for? >> nbc. >> doing what? >> journalist. >> do you report back to cia? >> no. we don't work the cia. >> don't lie to me! >> and finally the rescue. >> the rescue is one of the most dangerous times for a hostage. >> what about the smoke? >> smoke is deployed to hide the movements and the rescue. don't know what's going on. >> in a war zone, one false step and this could happen. >> so you're essentially using the same tools as the u.s. military and the british army. >> thought will cost you. >> a two-day course $2,500. >> there is a growing need for company like this.
the most kidnappings go unreported, the estimated number about, $50000 to 80,000 a year. >> employees need to be safe. their employers and the company want their workers to live and work and operate in these countries. >> that's why companies like this don't have to worry about losing business any time soon. for nightly business report. i'm dina gusovsky. >> thanks for joining us. >> we'll see you tomorrow. thank you for being with us.
tonight on "quest" -- in the face of a mounting global energy crisis, efforts to develop the next generation of renewables have become critical. meet the northern california engineers who want to take wind power to a whole new level. and they've been dead for almost 100 years. but these preserved animals are playing a critical role in helping biologists understand the plight of their modern-day cousins. major funding for "quest" is provided by --vi the national science foundation, and the corporation for public broadcasting. additional s